Swiss investigators call 1MDB scandal Ponzi scheme – $800mn missing

Reading Time: 2minutesStatement by the Swiss Attorney-General (click to enlarge)

Swiss authorities, investigating the involvement of Swiss banks in the alleged embezzlement and graft scandal surrounding Malaysia’s state investment fund 1Malaysia Development Berhad (1MDB), are suspecting that a Ponzi scheme had been used to conceal “substantial amounts” of misappropriated funds in addition to $1 billion the US Department of Justice believes to have been siphoned off the fund.

The Swiss Attorney-General’s office said on October 5 in an official statement that its criminal inquiries relating to 1MDB identified further suspect transactions involving the Swiss financial sector, including $800 million apparently misappropriated from investments in natural resources made by a 1MDB subsidiary, SRC International.

“It is suspected that a Ponzi scheme fraud was committed to conceal the misappropriations from both the SRC fund and from 1MDB,” the statement said.

(A Ponzi scheme is a fraudulent investment operation where an individual or organisation pays returns to its investors from new capital paid to the operators by new investors, rather than from profit earned through legitimate sources.)

Switzerland’s attorney general opened an investigation last year of two former 1MDB officials and other unnamed persons on suspicion of bribery and money laundering, among other offenses. The office now said it has made a new request for legal assistance from Malaysia, aimed at obtaining further evidence to corroborate its findings, as well as securing the help it initially requested in January. It said a response t the earlier request that “is still pending.”

This comes as no surprise as domestic inquiries into the 1MDB affair in Malaysia have come to a standstill after Malaysia‚Äôs previous Attorney General, Abdul Gani Patail, was suddenly retired on grounds of ill health last year, part of a series of moves which blunted criticism over 1MDB.

The new Attorney General, Mohamed Apandi Ali, was quick to clear Prime Minister Najib Razak, who is also Finance Minister and Chairman of 1MDB’s Advisory Board, of wrongdoing. Apandi also halted inquiries into alleged misappropriation of funds at SRC International.

Reading Time: 2minutesStatement by the Swiss Attorney-General (click to enlarge)

Swiss authorities, investigating the involvement of Swiss banks in the alleged embezzlement and graft scandal surrounding Malaysia’s state investment fund 1Malaysia Development Berhad (1MDB), are suspecting that a Ponzi scheme had been used to conceal “substantial amounts” of misappropriated funds in addition to $1 billion the US Department of Justice believes to have been siphoned off the fund.

The Swiss Attorney-General’s office said on October 5 in an official statement that its criminal inquiries relating to 1MDB identified further suspect transactions involving the Swiss financial sector, including $800 million apparently misappropriated from investments in natural resources made by a 1MDB subsidiary, SRC International.

“It is suspected that a Ponzi scheme fraud was committed to conceal the misappropriations from both the SRC fund and from 1MDB,” the statement said.

(A Ponzi scheme is a fraudulent investment operation where an individual or organisation pays returns to its investors from new capital paid to the operators by new investors, rather than from profit earned through legitimate sources.)

Switzerland’s attorney general opened an investigation last year of two former 1MDB officials and other unnamed persons on suspicion of bribery and money laundering, among other offenses. The office now said it has made a new request for legal assistance from Malaysia, aimed at obtaining further evidence to corroborate its findings, as well as securing the help it initially requested in January. It said a response t the earlier request that “is still pending.”

This comes as no surprise as domestic inquiries into the 1MDB affair in Malaysia have come to a standstill after Malaysia‚Äôs previous Attorney General, Abdul Gani Patail, was suddenly retired on grounds of ill health last year, part of a series of moves which blunted criticism over 1MDB.

The new Attorney General, Mohamed Apandi Ali, was quick to clear Prime Minister Najib Razak, who is also Finance Minister and Chairman of 1MDB’s Advisory Board, of wrongdoing. Apandi also halted inquiries into alleged misappropriation of funds at SRC International.